Correlation Between Sinopec Shanghai and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and PARKEN Sport at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sinopec Shanghai and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopec Shanghai Petrochemical and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Sinopec Shanghai and PARKEN Sport and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sinopec Shanghai with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and PARKEN Sport.
Diversification Opportunities for Sinopec Shanghai and PARKEN Sport
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinopec and PARKEN is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and Sinopec Shanghai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sinopec Shanghai Petrochemical are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and PARKEN Sport go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and PARKEN Sport
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 4.34 times more return on investment than PARKEN Sport. However, Sinopec Shanghai is 4.34 times more volatile than PARKEN Sport Entertainment. It trades about 0.13 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about -0.02 per unit of risk. If you would invest 13.00 in Sinopec Shanghai Petrochemical on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Sinopec Shanghai Petrochemical or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| PARKEN Sport Enterta |
Sinopec Shanghai and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and PARKEN Sport
The main advantage of trading using opposite Sinopec Shanghai and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, PARKEN Sport can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| Sinopec Shanghai vs. Marathon Petroleum Corp | Sinopec Shanghai vs. Neste Oyj | Sinopec Shanghai vs. ENEOS Holdings | Sinopec Shanghai vs. PTT OILRETBUS FOR BA10 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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